About Rationally Speaking

Rationally Speaking is a blog maintained by Prof. Massimo Pigliucci, a philosopher at the City University of New York. The blog reflects the Enlightenment figure Marquis de Condorcet's idea of what a public intellectual (yes, we know, that's such a bad word) ought to be: someone who devotes himself to "the tracking down of prejudices in the hiding places where priests, the schools, the government, and all long-established institutions had gathered and protected them." You're welcome. Please notice that the contents of this blog can be reprinted under the standard Creative Commons license.

Wednesday, October 07, 2009

Michael Moore’s Capitalism, a Love Story

I’m not shy about admitting that I like and even admire Michael Moore. For those of you who made it past that first sentence (this blog has some highly opinionated aficionados who don’t necessarily buy all I write), let me qualify. I do not think for a moment that Roger and Me, Bowling for Columbine, Fahrenheit 9/11, Sicko or, for that matter, the current release, Capitalism: a Love Story are documentaries. They are clearly not. I think of them as op-ed pieces, films that blend factual information, anecdotes and silly (but funny!) stunts to make a point, to force people to think by shaking them out of their complacency. And boy does this country need a bit of shaking and a lot more thinking.

Yes, Moore is largely preaching to the choir. Isn’t everyone? The choir needs preaching, just ask your Sunday morning pastor, or anyone at Fox News. And the difference is that Moore is much smarter and more truthful than either your pastor or Sean Hannity (let alone that buffoon of Glenn Beck).

Capitalism is indeed a love story, because through all the criticism it is obvious that the director aches for a better America, and he does not envision that America as a communist country. Moore graphically shows what everyone knows and yet most people do their best to ignore: that greed ruins people’s lives. Many people’s lives. For every venture capitalist or speculator who gets rich on Wall Street there are millions of people who get poorer by the day, who lose their homes or suddenly see their pensions evaporate. In one of its most poignant moments the movie shows a scared family huddling in their foreclosed house surrounded by a large number of police thugs getting ready to break in and evict them, while at the same time an asshole from the editorial pages of the Wall Street Journal tells the camera with a straight face that he has a problem with democracy, because it gets in the way of corporate profit.

Of course Moore knows that he is just engaging in antics when he drives around Wall Street to make a citizen arrest on the financiers who got this country and much of the rest of the world close to bankruptcy. The same financiers who then turned around and benefited from a huge government bailout engineered thanks to the fact that the federal regulatory agents are run by former financial officers from Goldman Sachs. Capitalists are all against government intervention, it seems, until it is necessary to save their ass, at which point they find their inner socialist and hold on to it for dear life.

Michael Moore is no communist or socialist (the two are different things, contrary to most American’s perpetual misunderstanding). He is what in Europe is called a social-democrat, someone who wants a form of (seriously) managed and regulated capitalism because he knows that in moderation, capitalism really is a great engine of economic growth and prosperity for everyone. But when left unchecked, capitalism turns into a vicious machine that increases the gap between 99% of the population representing the middle and lower classes, and the obscenely rich remaining 1%.

And there lies the real puzzle. Moore explicitly asks the same question I’ve been pondering now for many years: how is it that the Republicans, the party that defends the interests of the rich, continuously manage to get close to half of the votes in each election, while their policies manifestly hurt the overwhelming majority of the population? Moore’s answer is only part of the truth, but it is truthful nonetheless: capitalist demagogues the world over (not just in the US) have managed to convince everyone else that the common person has just enough of a chance to become rich that it is in everyone’s interest to let the currently rich do what they want. After all, if you raise taxes on them, some day you may join the ranks of the high society and have to pay those same taxes. Call it the lottery fallacy, if you will (any undergraduate student of economics will tell you that playing the lottery is most definitely not a good strategy for your retirement).

As I said, this is only part of the answer. Conservative parties the world over successfully vie for power on the basis of a complex cocktail that includes the endorsement (if not always the practice) of traditional values, religion, and of course the military (including a continuous game of scaring the shit out of people using real or imaginary dangers to maintain perpetual wars that serve the dual purpose of keeping the conservatives in power while obscenely filling their pockets with profits).

And yet, it is incredible that so many people do buy into inane ideas like “trickle down economics,” “too big to fail,” “taxes are theft,” “we have the best health care system in the world,” “God bless America” and so on and so forth. Trickle down, Reagan-style, economics has in fact caused a huge leap in the disparity between the rich and everyone else, essentially undermining the foundations of the American middle class. The idea of a bank or corporation that is too big to fail (and therefore needs to be bailed out with taxpayers’ money) is a capitalistic oxymoron if there ever was one. If taxes are theft then by the same “logic” working is slavery (neither is true, obviously). We manifestly and demonstrably do not have the best healthcare in the world. And as far as God is concerned, of course he doesn’t exist, but if he did, why on earth would he prefer one nation over another (and at any rate, didn’t he already say he likes Jews the best?).

So what’s the solution to this mess? Moore does show some glimmer of hope in Capitalism: labor unions (despite their own share of problems) can indeed make a difference for the obvious reason that workers need to be united in order to counter the crushingly powerful interests of the elite. So let’s reorganize and strengthen our unions. Moore visits businesses in the United States that are run as cooperatives, where the members own an equal share of the company, where decisions are made democratically, and the CEO makes as much as any other employee! Guess what? They are highly profitable, so let’s use them as a model to re-engineer our economy from the bottom up. And there are some valiant members of Congress who did stand up to Wall Street when the bailouts were being rammed down their colleagues’ throats. So let’s re-elect them and throw the rest of these bought by corporate interests buffoons out of office at the next democratic opportunity.

The battle for justice and equality is a perennially uphill battle. That’s why the choir needs preachers like Michael Moore to get our juices running again, to get newly pissed off at what some politicians and big corporations are doing to our way of life. Now get out, organize, and vote.

80 comments:

"capitalist demagogues the world over (not just in the US) have managed to convince everyone else that the common person has just enough of a chance to become rich that it is in everyone’s interest to let the currently rich do what they want."

I do not understand your narrative. Capitalism, left unchecked, leads to degradation of the lives of 99% of the people while only 1% prosper?

I mean, please look around you, you will find many things that could brighten your mood considerably when considering capitalism.

1. You have a refrigerator. the reason you have this is that their is sufficient demand for them so that sufficient numbers of them can be produced so that the total cost is low enough so that most people can afford them. I am sure that if you where living in the nascent age of refrigerators, you would have been outraged that only the elite few could afford such an extravagance. 2. Lets' talk about computers. Once again, they are now so affordable that they are ubiquitous, however in the beginning only a select few could afford them.

Now, these are concrete examples. However, your talk is much more amorphous. You rail against the elite and about how are middle class foundation is being eroded.

The fallacy that you show is that you have in your mind a picture of what kind of society that you would like to see. You believe that "we" should do something about it.

it isn't a matter of opinion, the 1% vs 99% figure is based on how income in real dollars has changed since the 1970s.

Andy,

please no straw men. As jacob pointed out, nobody (certainly not I, nor Moore) is suggesting to do away with capitalism, only that a controlled version of it is much preferable to a more unbridled one, for a variety of social reasons.

Ahmet,

Gramscian hegemony analysis? I think I know that we are at the beginning of the 21st, not the 20th, century...

yes, P&T also engage in (comic) op-eds. But I don't see why I'm not fair to them: first of all, I like a lot of what they do; second, when I don't like it, I write about it (stay tuned, there's another post on them coming soon...).

"it isn't a matter of opinion, the 1% vs 99% figure is based on how income in real dollars has changed since the 1970s."

What data are you talking about? In the US at least, income inequality has increased since circa 1970, but real income hasn't actually declined for any quantile of the household income distribution. I've checked this out in more depth previously, but these were the best data I could find quickly: http://en.wikipedia.org/wiki/File:United_States_Income_Distribution_1967-2003.svg

Also, why all the animosity about the financial bailouts? Yes, it's hypocritical for republicans and CEOs to be against government intervention except when it benefits big corporations, but many conservative economists were against the bailouts for fear of moral hazard, consistent with their principles. While the bailouts could have been structured better (e.g. less risk for taxpayers, restrictions on executive compensation, etc.), the basic rationale made sense:

a. big companies in trouble needed cash to keep operatingb. because of the credit crunch, they couldn't borrow from the private market as they would have in 'normal' timesc. so they had to turn to borrowing from the lender of last resort, the Fed.

My understanding (caveat emptor: based on what a Democrat friend related to me informally) is that most of the bailout money has now been paid back, so it hasn't turned out to be a big loss for taxpayers. If, on the other hand, these corporations had been allowed to fail, many average workers would have lost their jobs and the recession could have gone much deeper.

These points aside, I agree with you (and Moore?) that some sort of regulated capitalism (that embraces many non-economic goals as well!) is the best system available. I guess I'm just less pessimistic about the current system and Obama's handling of this crisis. I haven't seen any of Moore's last three movies (including Capitalism) because I learned from the first couple that he plays fast and loose with the facts, preferring gimmicks and melodrama to critical thinking and evaluation of evidence. It's too bad, because I actually generally come to many similar conclusions about policy, I just don't care for his tack.

Moore explicitly asks the same question I’ve been pondering now for many years: how is it that the Republicans, the party that defends the interests of the rich, continuously manage to get close to half of the votes in each election, while their policies manifestly hurt the overwhelming majority of the population?

The default mindset of a majority of the uneducated human population is one of tribalism. Tribalism can be defined as embodying two dynamics, out-group animosity, and in-group hierarchy. All of the republican positions are strongly tribal. Economics: they divide the population into two groups, the deserving and undeserving, and show an inhuman lack of empathy for the latter. Foreign policy: good guys, bad guys, American exceptionalism--and look at how angry conservatives get when Obama shows "weakness" by apologizing for mistakes. Immigration: nough said. Gun control: criminalize gun ownership and only criminals will own guns--again good guys/bad guys. Abortion/Euthanasia: the big Alpha in the sky is the only who can decide matters of life and death. Conservatism=tribalism.

"Moore explicitly asks the same question I’ve been pondering now for many years: how is it that the Republicans, the party that defends the interests of the rich, continuously manage to get close to half of the votes in each election, while their policies manifestly hurt the overwhelming majority of the population?"

Don't underestimate the importance that bold-faced lies told by republican politicians and their cronies play in their electoral success. There is no actual ideological difference to be split over whether evolution is true, global warming is caused by humans, condoms prevent STDs, abortion causes cancer, Iraq had WMDs, stem cells have important medical applications, species are going extinct due to humans, etc. Leaders of today's republican party don't quibble about issues like the role of government in the economy or the appropriate use of military force - they simply make things up and deny evidence in a manner so unconcealed, that any dolt should be able to see through it. That half the population, including many well-educate people, do not, is pretty remarkable. But it at least makes it pretty clear that the average voter is probably too ill-informed to vote in their own economic self-interest even if they wanted to.

A couple of things about the bailout: some banks, Goldman-Sachs among them, did not WANT to be bailed out. The government forced them to take the money. And some WANTED to begin paying it back ASAP, the government forced them not to until they had passed stress tests.

Furthermore, the strongest opposition to the bailout in congress was from Republicans, because it disagreed with their ideology. However, I believed Ben Bernacke when he said that it was desperately necessary to avoid a depression.

There WILL BE an overhaul of financial regulation. They're working on it. One solution I like is that any institution deemed "too big to fail" should receive extra regulation, if not extra taxes, to the point where they will be at a competitive disadvantage, and thus find it worth their while to voluntarily break up into smaller organizations that are NOT too big to fail.

As for reviving unionism, it depends on the means. One measure that's on the table is to remove the secret ballot vote when unionizing companies. The only reason I can see for a worker to publicly sign the petition to unionize his company and then vote against it by secret ballot is if he was physically intimidated by the union. A vote for ending the secret ballot is a vote for thuggery and intimidation.

Unionism has a LOT of bad effects. It results in people not being paid according to their skills and the scarcity of what they have to offer, but rather being paid according to what they can extort by enforcing monopoly power against their companies while physically intimidating competitors (known as "scabs"). One of the biggest problems facing the economy is that so many people arrive in the workforce without skills. Unionism undermines the incentive people have to get skills. I had a boss once, from the UK, a heavily unionized and much less productive country. He had a PhD in computer science. He said back in the UK he would be paid less than a train conductor. I don't know about you, but from where I sit, that's not just.

The unions were key in destroying the US auto and steel industries. The state of Michigan is a basket case, because not only was their primary industry destroyed by over-unionization, but once the Michigan auto industry started shrinking, hardly any companies wanted to open new plants in Michigan to hire that culturally diseased workforce.

You make some good points. One thing to keep in mind about unions is that the system we have in the states - where there is typically one union per national industry - is not the way unions exist everywhere. Under this system, a union could, in principle, sink individual firms for the greater good of the industry's workers, and generally are protectionist, since they represent workers in one country. In other countries a union is tied to a specific firm, making it such that the incentives of the union align with those of the firm. This means they may accept conditions that allow a firm to stay competitive. In other places, unions that cross industries may be less liable to protectionism since a tariff on one good is effectively a tax on another.

I don't have a strong opinion one way or another about unions, though I think we should protect freedom of association whether it be in the interest of labor or management. That said, as the examples I gave above suggest, there may be union structures that mitigate some of the downsides to unionization while providing bargaining power to workers.

I doubt you've ever been in a union. I have never met anyone who has been in a union who has said they have been intimidated by their own organization. My parents, for instance, who in fact wish their union can do more a lot of the times, would hardly have the benefits they do now - with a decent retirement package awaiting them when they retire (only a couple more years now) with a company who may no longer exist shortly after. Yeah, they're both not as skilled as some of the 20-somethings that are there (especially those more computer-savvy) who don't make as much, but after 32 years slaving away at hard labor, half of which on third shift, I'd say you'd be damned if you sit there and said they don't deserve it.

Likewise, theres a lot of people within management in a lot of companies, CEOs included, who could be accused of being undeserving of their pay and position.

It's easy to get riled up from scare tactics, but it doesn't give your arguments any credibility.

Unions are surely not perfect, but they provide a well-balanced measure to keep employers in check. In case you haven't noticed, since unions have lost a lot of power, wages haven't increased for people in nearly 30 years. About the time Reagan launched his union-busting campaign. On the other hand, as peoples' wages have stagnated and working conditions have deteriorated, profits for companies have increased over that time - especially during the 90s. There has been a lot of study on this, I suggest you look it up before you reach for talking points.

It's also interesting the measures the private industry has taken against union-organizing. What a great PR campaign they have launched since the National Labor Relations Act. In my own workplace, for example, among the standard programs employees must go through when they reach full time employment (typical workplace do's and don'ts, like sexual harassment sessions and tests, etc) they include a class which has you sit through a session where they lecture you on the undesirability (their own word) of union-organizing.

Better to intimidate them now before you accuse them of intimidating you later, I suppose.

Unions are not perfect? Unions baaad! Get rid of unions! So workers don't have the right to organize? Only businesses or employers get to organize? I'm sure you can think of plenty of bad things that employers do to their employees. Say like intimidation, unfair labor practices, unsafe work places, poor management and so on. I'm sure you're not going to argue that business is always perfect and virtuous and never does anything wrong. Soooo, we should get rid of businesses too, right? Right?!

"What data are you talking about? In the US at least, income inequality has increased since circa 1970, but real income hasn't actually declined for any quantile of the household income distribution. I've checked this out in more depth previously, but these were the best data I could find quickly: http://en.wikipedia.org/wiki/File:United_States_Income_Distribution_1967-2003.svg"

I don't believe the chart you reference represents income adjusted for inflation, or adjusts for the number of people within the household that are required to work to maintain the income level.

It also does not account for the extra "income" that comes from increasing indebtedness. If one looks at income taxes, 1% in the U.S. is doing quite well, and increasingly well, while the other 99% is living month to month, and failing.

Moore visits businesses in the United States that are run as cooperatives, where the members own an equal share of the company, where decisions are made democratically, and the CEO makes as much as any other employee! Guess what? They are highly profitable, so let’s use them as a model to re-engineer our economy from the bottom up.

Consider this tidbit:

In 2007, CEOs in the S&P 500, averaged $10.5 million annually, 344 times the pay of typical American workers. This was a drop in ratio from 2000, when they averaged 525 times the average pay. - Washington Post via Wikipedia

Now, far be it from me to argue that a manager with the responsibilities of a CEO deserves the same compensation as, say, a janitor in the same firm (e.g. considering educational background, hours, stress, etc.). But several hundred times more? Perhaps according to the ethics (or lack thereof) of free-market fundamentalists, but otherwise...

To the degree that worker-managed firms can lessen or ameliorate some of this disparity (and without necessarily hitting economic efficiency, not that that should be our only criterion), they do indeed deserve more encouragement and support from our society (at all levels).

R. Moore said "I don't believe the chart you reference represents income adjusted for inflation"

Yes, it does. It's income in 2003 dollars. And, by the way, if it were in nomial dollars (not inflation adjusted), it would look like everyone was getting richer, not poorer.

"or adjusts for the number of people within the household that are required to work to maintain the income level."

Well, I can't answer this directly, but the workforce participation has only gone from 60% in 1970 to 65% today. (data: http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=LNS11300000)

So, under the worst case scenario, the poorest 5% of single income families now have two people working instead of one. I doubt that is the case, but it certainly militates against the claim that 99% of the population is worse off in terms of income.

"It also does not account for the extra "income" that comes from increasing indebtedness. If one looks at income taxes, 1% in the U.S. is doing quite well, and increasingly well, while the other 99% is living month to month, and failing."

How exactly does debt increase income? Tax return data isn't quite as good as survey data since tax codes change over time, but it's not clear that they tell a different story. Do you care to provide any evidence that it does? The only thing I can find is that the % of income tax paid by the top 1% has increased while it has decreased for everyone else. This is not surprising given that all percentages must add up to 100 - if the % paid by one group increases, the % paid by the complementary group must decrease. This does not imply that the actual income of one group has declined in real terms, only that inequality has increased.

I think you are correct that (part of) the problem is that it is *inequality* not absolute that has increased, not that the absolute income has gone down.

However, wages in real dollars for the majority of the population have not increased much over decades, which means that people are getting poorer (because of inflation).

Moreover, the extremely reduced social net in the US causes the well documented fact that a lot of middle class people have to file for bankruptcy because they can't pay their medical bills. Not exactly a socially equitable or just outcome, no?

Finally, the top 1% is actually paying a lot less taxes, in percentages of their income, than before Reagan, which in my book is also unfair, considering that there is no way to become that rich without actually exploiting other people's labor.

As a means of income redistribution, unions are very suboptimal. They do nothing for those unable to work, forexample. I can see them being justified when the workers aredesperately starving, but I get upset seeing, for exampleairline pilots or professional baseball players going on strike for more pay. I think once you're above a certain income level you should lose any right to collective bargaining. The government should redistributeincome directly through more aggressive taxation than we now have for the rich and a negative income tax for the poor. This would achieve the benefits of redistribution without all the harm done by strikes and it wouldtake care of those unable to work.

The other thing about union wages is they give the worker the illusion of having earned the money rather than having extorted it. Direct redistribution by the government would give no such illusion: the charity aspectwould be obvious.

Regarding CEO pay, if you really can't get a much better CEO for $10 million than you could get for $1 million a year, it's really a matter of stockholders needing to recognize that. It's their money. The stockholdersaren't paying all that money to the CEO's because they like it, they really believe they're getting theirmoney's worth. Hostile takeovers are one method of keeping CEO's on their toes.

Americans tend not to realize how bad unions can get. We've had it good here, especially since the 1980's. I was in Australia when I was in high school in the 1970's and it was unions run amok. Melbourne had a great streetcar system, but they went on strike about once every six months. It was often enough that you really couldn't phone in to work and say "I can't make it to work today, the streetcars are on strike". Result: everybody still had to have a car, undermining one of the main reasons for having a streetcar system. One of the thing they went on strike for was they didn't want to work late at night, so the streetcars stopped operating at midnight. So if people who were going out partying at night drove, and drove home drunk.

Unions were generally organized by whole industries at a time. In the US, when there's an airline strike, we see, for example, United Airlines goes out of service, so we just take Delta. In Australia, all airlines at once would go out. People would be unable to get into or out of the countries for several days. And it wasn't when the whole airlines went on strike, sometimes it was just a small group like the airline refuelers. I was on a flight from Honolulu to Melbourne when the pilot came on the intercom and said "We will be making an unscheduled refueling stop in Fiji. We can make the round trip from Fiji to Sydney and back without refueling because the airline refuelers in Australia are on strike. Those of you going to other place in Australia are on your own. Sometimes it was the refuelers, sometimes it was the air traffic controllers. It would be really hard on people who were on vacation and they had to extend their vacation by an extra week, which sounds fun until you realize the cost of an extra week at some exotic resort was beyond their means.

I remember a strike against the phone company. Sydney had a mail strike. You were personally disrupted about once a month by some strike or other. All this disruption, and it's not even an optimal way of makingdecisions.

you said: "However, wages in real dollars for the majority of the population have not increased much over decades, which means that people are getting poorer (because of inflation)."

real dollars ARE adjusted for inflation.

http://en.wikipedia.org/wiki/Real_dollars

So if real wages have stagnated, then people can be getting poorer; they are simply getting no richer.

"Moreover, the extremely reduced social net in the US causes the well documented fact that a lot of middle class people have to file for bankruptcy because they can't pay their medical bills. Not exactly a socially equitable or just outcome, no?"

agreed.

"Finally, the top 1% is actually paying a lot less taxes, in percentages of their income, than before Reagan, which in my book is also unfair, considering that there is no way to become that rich without actually exploiting other people's labor."

The marginal tax on highest earners has decreased substantially over time, but the effective tax rate on the top 1% (a better metric) has actually not decreased as much (at least since 1979, the earliest data I could find). That means it hasn't increased since 1979 either, which it probably should to create a more progressive tax system.

source: http://cbo.gov/publications/collections/taxdistribution.cfm

It seems like you and others here are getting your talking points from Michael Moore and others like him. As I stated before, (and as my corrections indicate), Moore is sloppy. This makes it easy for conservatives to make it seem as though the progressive agenda is founded upon distortion and exaggeration, when in fact a more rigorous presentation analysis of the data lead to largely the same conclusions.

Regarding marginal tax rates for the rich, I think right now, the top marginal tax rate, federal, state, and local, for a New York City dweller, is about 40% or so. I read in Paul Krugman's "The Conscience of a Liberal" that in the 60's / early 70's it was 70%, in the late 40's / early 50's (when we had the huge WWII debt to pay off) it was about 90%. I see no reason why the world would end if tax rates for the rich were substantially higher than they are now.

Actually no. Health insurance reform is the perfect example, "government take-over of health care" is an emotional appeal. The "public option will control health care costs" or "it will keep the insurance companies honest" are rational arguments. Whereas "you can become sick and lose your job, your house, and everything you've got" is emotional. And it's not just that both emotional pitches are negative and fear-based, but health care is just a topic it's hard to sell hope with.

And I'm not naive, insurance company contributions are the driving force in this debate, but on the margin, the arguments above can be effective.

I do not think "normalizing to 2003 dollars" and "adjusted for inflation" is really the same thing at all.

I am not an economist, but I suspect your expertise here is lacking, as is the validity of your conclusions.

Your lack of understanding how debt can be used to increase apparent income also suggests you are not putting much thought into this subject. Many Americans have been forced to use credit cards in an attempt to match monthly income with monthly expenses. I do not think this is a big secret.

Apologies if I have misinterpreted your views, but you seem rather dogmatic about it, grasping at any source of internet data that proves whatever point you are trying to make. Which makes your characterization of others as "talking point" debaters rather ironic.

Americans tend not to realize how bad unions can get. We've had it good here, especially since the 1980's.

Perhaps you missed it, I'll repeat: since unions have lost a lot of power, wages haven't increased for people in nearly 30 years. There is a pretty good correlation in the United States where/when corporate profits get stuffed, unions are weak. There is a glaring statement to be made here, I don't see how you can say 'we've had it good'.

I obviously can't speak with familiarity with that situation in Australia, but frankly, those aren't arguments against unions - they're complaints about inconveniences. What were the unions striking for? Union reps happened to wake up one morning and say, 'hey, let's strike and piss off the city because we can!'. No doubt there are reasons - reasons for those workers.

Every business wants (and needs) to turn a profit, but they also need manpower in order to do it. That has to come at a price. I would actually agree that the current systems today of income distribution could be improved, but the solutions will not come when businesses take measures to give as little as they can to that manpower in order to benefit themselves. This happens on many levels. (As a side note, Massimo's review of Moore's film mentioned something about businesses that are run as cooperatives - that could well be a road to travel to better the current systems of work and pay.)

The other thing about union wages is they give the worker the illusion of having earned the money rather than having extorted it. Direct redistribution by the government would give no such illusion: the charity aspect would be obvious.

Please expound on this further.

Regarding your response to CEO pay - that does happen - stockholders ensuring their investments are in good hands, certainly. But you really don't think thats all there is to it, do you? The system is that efficient? You mentioned the auto and steel industries - do you really think the CEO did his part in making sure their products were competitive in a world market? Or do you honestly believe the unions prevented that?

I actually agree with what you're saying and there is validity in the argument that the right tends to win the public relations battle.

My primary concern though, is that we shouldn't sacrifice the importance of things like facts, logic and policy in order to persuade. You can do both, though, (emotional and rational appeal) and that's an investment that requires the left to spend as much - no, more than the right into things like the media, public relations and advertising.

Theres actually a lot of scholarly work done in this area - particularly researching the success of the right in its dedication over the past few decades in these areas - think tanks like the Heritage Foundation, Cato Institute, American Enterprise Institute, among others - working to 'pull heartstrings', as you put it.

The left certainly has their share of think tanks, but they actually don't go out of their way to make the same investments in media projects as they prefer measurable short-term results.

People, I'm glad for so many comments and such a lively discussion. I hope you understand that I only have time to intervene from time to time...

Chris, I listen to Moore, but I read more widely than that, so although we may argue on specifics, I don't just take "talking points" from him. Please explain why the effective tax rate is better than the marginal one (though frankly, even that wouldn't substantially change the moral argument).

lalawawa, the unions or the workers are not stealing anything, and characterize it as such seems to me, frankly, an incredible turning of things upside down. As for CEOs pay, we should have all learned by now that they have nothing to do with performance, and that unfortunately it isn't just the stockholders' money to goes down the drain, it's potentially the entire global economy.

If you don't trust Wikipedia, pick up any Econ 101 textbook. If I'm wrong, please explain how I am wrong, rather than simply asserting it without justification.

"I am not an economist, but I suspect your expertise here is lacking, as is the validity of your conclusions."

Well, you are entitled to your opinion. However, you have provided no evidence for any of your points, whereas I provide links to all of my sources (more on that in a second). For what it's worth, I also have a minor in Econ. Conversely, the fact that you don't know the definition of real value suggests that your economics expertise is seriously lacking.

"Your lack of understanding how debt can be used to increase apparent income also suggests you are not putting much thought into this subject."

Yes, people can CONSUME more by going into debt (negative savings), but INCOME is a measure of how much money people make per unit time. If you do not know the definition of consumption and income, as used in economics, please consult your Econ 101 text book.

"you seem rather dogmatic about it"

dogma - a principle or set of principles laid down by an authority as incontrovertibly true

Unlike someone who is dogmatic, I have provided evidence for all of my statements. You have not provided any. If you think the evidence I'm using is bad or I have misinterpreted it, please explain how. If you provide a reasoned and evidence-based case for why I am wrong, I will happily change my mind.

"grasping at any source of internet data"

Please, actually check my sources. I have provided data from the US Census, CBO, and BLS. Do you find these sources unreliable? If so, please explain why rather than simply asserting it. If I had time to scan textbooks and journals articles to send to you, I would, but I don't. I am not grabbing data that fits my preconceived "dogma", but consciously choosing data that answer the question I am asking from the most reliable and readily available sources that I know.

Take time to actually examine the links I provided, or pick up some textbooks and scholarly articles. If you have any reasoned arguments against what I conclude, or would like to point out data that I have overlooked, please do. If, on the other hand, you want to attack my credibility and name call, well...I can't stop you, but don't be surprised if I find it unconvincing.

Sorry - I know you don't take 'talking points' from Moore. I've just been noticing that as I conduct searches on these topics, Moore's film keeps coming up, which makes me think that at least a good portion of your most recent post is directly influenced from the film. Not surprising, since you were reviewing the film! Anyway, I didn't mean it as a serious insult. I just wanted to reemphasize that I don't find him reliable.

"Please explain why the effective tax rate is better than the marginal one."

Caveat emptor: I don't know much about how effective tax rate is actually calculated, only what it is intended to capture. If someone has better info, please share.

Basically, the marginal tax rate is only levied on income above a certain amount after deductions and all that. So income that is not taxed because it is, say, put in 401K's or, taxed for another reason (capital gains, maybe???) is not counted in this. Therefore, as tax codes and the way people invest their money change, the actual percentage of total income that is spent on taxes may change irrespective of the marginal tax rate. The effective tax rates tries to capture the actual % of income that is spent on taxes (once again, I don't know how, but I trust that the CBO is correct).

This also comes up with corporate taxes. Conservatives try to claim that US corps are taxed more than their European counterparts because the tax on profits is higher in the US than in most of Europe (true). However, if you look at the effective tax rate, what companies actually pay after taking into account all the loopholes and what not, US corporations actually pay the same or less in taxes than European corps. Paul Krugman has written a lot on this. For example: http://krugman.blogs.nytimes.com/2008/08/18/pity-the-poor-corporations/

Lalawawa: "Unions are very suboptimal".........would you care to re-cast that sentence? I'm constantly amazed that you can get people to bash unions, which, when all's said and done, are on their side - like Massimo with the Republicans - why DO people vote against their own interests? (Not that I think one's own interests are everything in politics, nor should be). My theory, as a refugee from Thatcher's England, used to be that it's a "battered wife" syndrome - you lose self esteem and initiative after being knocked around by the capitalist machinery for a bit. Plus confirmation bias - people don't want to admit they've made a huge blunder with their vote, so go on hoping the policies which are driving them under will eventually spear the happy ending.

It's hard not to notice that Pigliucci is much less likely to cite actual scholarship when advocating his left-wing economic views. How convenient for him to declare that he doesn't have time to respond to many of his critics, then; that way, he'll have more time to prepare another socialist tirade based on news clippings and pop journalism.

my disclaimer about being unable to respond to everyone was not an excuse, and it applies to any post, regardless of the topic. Unfortunately (or, rather, fortunately) blogging isn't my day job, I do it only because I think intellectuals should be engaged in a broader discourse, and I learn quite a bit from it (thanks for the explanation about tax rates, Chris).

As for scholarship in economics, there is a lot of technical work out there, but my view of economics itself is rather skeptical (nor am I the only philosopher who has such a view). More importantly, unlike in the case of pseudoscience, we are not talking just about facts, but about values. As I pointed out before, should you be able to cite peer reviewed research that shows that slavery is a godsent for the economy I would still oppose it on purely moral grounds.

That, incidentally, is also the difference between my criticism of Penn and Teller and my agreement with Moore: P&T are excellent when they talk about matters of fact, but policies have more to do with matters of value (and yes, I am aware that even that distinction is not sharp!). Moore may be imprecise on some factual issues (though often negative reviews of his movies make mountains out of minor inconsistencies), but is right on target on moral grounds. Remember, they are not documentaries, they are op-ed pieces.

Cavall de Quer said... "I'm constantly amazed that you can get people to bash unions,..."

Times do change and it is possible that unions (in the U.S.) have changed but my introduction to them was in the 1950s. The union bosses, like Jimmy Hoffa, were tantamount to American Mafia. Union members destroyed property, beat non-union members with baseball bats and lead pipes and went on strikes for wages that were 2 to 3 times higher than similar workers. These thuggish tactics put me off and I have never recovered a liking for unions. I have in fact worked at some jobs that were covered by unions. Fortunately those unions (AFSCME was one of them) were not as bad as AFL-CIO or UAW so I did not have to participate in any strikes. I still think union tactics are misdirected, and as we have seen with GM, the gains they made for workers in the 1960 - 1980 time frame have crippled the auto industry against their foreign competitors such that today's auto workers are just flat out of a job altogether. That wasn't too smart in the long run.

Somewhere up above there was mention of worker-owned business. This is one of the points about unions that has always puzzled me. Instead of spending millions (billions?) of dollars on donations to political campaigns, advertising, legal expenses, etc. Why don't they just buy the damn company? Or start a competitor company? If they think a company should be run for the benefit of the workers, then they ought to just start one and run it that way. Instead of beating up management with lead pipes or law suites, they should beat them at their own game.

So in nominal terms, income has risen, but so has the cost of goods, so has income increased in real terms? To do this, let's standardize income relative to our basket of goods by pricing everything in 2003 dollars. In 2003, you could buy 20 units of goods. In 1970, you could buy 10 units, so in 2003 dollars, your income is $1000. In 2009, you could by 19.1 units, so income in 2003 dollars is $1910.

So between 1970 and 2003, real income rose, while between 2003 and 2009, real income declined. So yes, denominating income in a standard way (2003 dollars in this case) is the same thing as adjusting for inflation. If you still don't believe me, consult a textbook.

I have no doubt that you cannot debate your readers at length, but I have not seen you deploy this fact in any other threads, and I read all of your posts. Your greatest degree of competence is in Biology, followed by Philosophy. When discussing those topics, you have lots of time to refute your critics...

It is sad to see another leftist intellectual announce his skepticism of the validity of an entire field. Economics is at least as rigorous a field as Philosophy is. There is a wide range of views on a wide range of issues to be found among economists. Books addressing both positive and normative issues on almost every aspect of economics are put out by major university presses every year.

Pigliucci knows this. But he also knows that generally, economists favor markets over government control. This single fact accounts for 95% percent of all of the Econo-skepticism out there, including, I'm sure, Pigliucci's.

first of all, please don't call me Pigliucci, it sounds weird. I prefer Massimo, but if you want to go formal, then go all the way and write Prof. Pigliucci...

You claim that you read most of what gets posted on this blog, and I thank you for that. But surely if that is the case you know that I have actually been much more active on this and the related libertarianism thread than I usually am. But it is taxing my time, which is unfortunately very limited.

Further, I am not dismissive of economics in general, but there are serious criticisms raised to dominant economics models and approaches, and you'll find an ample literature if you look into it.

Are you quite sure that you're more active in these economically inclined threads than other threads? I recall you arguing quite a bit in favor of the existence of moral truth...

But in any case, I think you are actually more called upon to defend your views more if they're more outside the mainstream of scientific thinking. You have a readership of people who, at the very least, are highly respectful of science (I do not count caliana because she probably doesn't read your posts). Many of them, like me, are probably university students studying scientific fields. We really like the footnote symbol at the end of a sentence. This is not a bad thing.

We are going to be more skeptical of statements you make that are not sourced to quantitative analyses performed by people with the letters "P, "h" and "D" after their names. The point is not that such analyses can't be wrong - as a philosopher of science, you know that all scientific analyses can be wrong - but that, all things being equal, it's better to pay attention to the experts' opinions than the opinions of people like Michael Moore.

There are, as a matter of fact, academic economists who would agree with many of your views. But let's keep in mind that you do not generally cite them when dealing with economics. By contrast, you often do discuss academic biologists or philosophers. So it seems that you think it's less important to discuss academic economists when discussing economics than it is to discuss legitimate philosophers of biologists when discussing philosophy or biology.

And let's also keep in mind that the analyses of those economists who agree with your views are likely to be more quantitatively informed and more nuanced than your own. The impression I get is not that you've read contrasting views on economic systems by various economists and come to a reasonable conclusion based on those readings and your own reasoning - rather, it seems that you came to your own conclusions about economics based on popular media.

But that's just my impression. If other people get the impression that your posts about economics are close to being as rigorous and informed as your posts about philosophy and biology are, consider their opinions as well as mine.

I am not saying that your views on economics are invalid. I'm saying that they don't give off the same appearance of well-thought-out-edness and rigor that your views on biology or philosophy do.

We can stop now. Your latest comment (which studiously avoids reference to the links you previously claimed in error supported your premise, I notice) indicates that your don't understand the even the basics of this discussion.

Normalization is a mathematically first order adjustment of data. Inflation is a rate, a value that changes dynamically over time. The naive analysis of your example shows your don't understand the difference. It is the same mistake made by those who claim Reaganomics resulted in an increase in federal revenue, so you are not the first to fall prey to this error.

However, you show no willingness to learn anything here, (I would have thought being refuted by your own links would give you pause), blithely extend a line of reasoning whose basis has been shown to be invalid. Further discourse would be futile.

I to have on occasion had similar criticism of Massimo, but from the left. But give the guy a break, he can't know everything. :)

By the way, I imagine if Massimo had the time, he could go into citing scholarly research in his critique of capitalism as well.

Yes, neo-liberal pro-business and pro-capitalist economists dominate the dicipline of economics. But there are also dissident economists to this mainstream orthodoxy. There are dissident institutional, Keynesian, radical, and Marxist economists who provide critical perspectives on capitalism. They may be the minority in the dicipline, but they do scholarly work.

One name that comes to mind is Michael Perelman. You can find info. on some of his books at the link below. I am currently reading his Railroading Economics.

http://michaelperelman.wordpress.com/

I think Massimo is right to be skeptical of pro-capitalist economists. For example they claim that markets and capitalism are the most "efficient" allocation of resources. How absurd and non-rational can this be? A system that concentrates such great wealth and income in so few hands, while leaving a good portion of the people that actually produce that wealth in such relative poverty?

thanks, it's nice to be criticized from both the left and the right... :-)

I should add (in fact, repeat) that the discussion at hand has less to do with models and data (i.e., facts) than with values. If an economist were to conclusively show that a society that accepts slavery is more economically viable or stable than others, I would *still* be dead set against slavery.

I think that you're trying too hard to detach normative economic statements from the positive statements that must underpin them. The normative suggestions made by most economists are more respectable than those made by most non-economists because the economists are more in touch with the overall effects that the courses of action they prescribe might bring about.

You're right in believing that which ends one seeks strongly affects one's normative economic claims, but most economists want to reach ends that, while not entirely the same, are pretty similar. Most economists have vaguely utilitarian conceptions of how economies should or should not be regulated. I think that very few academic economists could honestly be accused of not feeling sympathy for the poor or believing that, all things being equal, increased income disparity is a good thing.

"I should add (in fact, repeat) that the discussion at hand has less to do with models and data (i.e., facts) than with values."

...what?

We want our economic system to be informed by philosophy and for it to benefit the most people possible. Do you not consider what economic system does this best a topic of scholarly discussion? Have you pre-supposed that you are right?

uh? How is it making a distinction between values and facts "presuming to be right"? Would you favor slavery if it were economically advantageous?

Joseph,

I don't know where you guys get the idea that economists do their work in order to maximize happiness or welfare. They can't. They are concerned with the effects of policies on the financial system. Period. It is a completely unfounded libertarian assumption that one leads to the other, or indeed that the two are more than marginally related.

“uh? How is it making a distinction between values and facts ‘presuming to be right’?”

Here’s the thing, of course we want to do what is best for everyone, why point it out? Isn’t that what the discussion is about in the first place? You were perhaps presuming yourself to be right because you can’t just point out your approach is better for everyone as if that is the end of it. If we want to argue for a particular approach it must come down to “academia and quantitative analyses”. “Would you favor slavery if it were economically advantageous?”No, and that is why I said “we want our economic system to be informed by philosophy”. Using slave labor may be economically advantageous but it is philosophically abhorrent. ----You know, you can look at figures and statistics to see if people are being hurt or benefited by economic policies.

Wow. You are incredibly rude and condescending for someone who apparently doesn't know that much and is unwilling to learn. Yes, I didn't link to anything because it is clear to me that you don't understand any of it. I tried to give an elementary example of how economists calculate real income by adjusting for inflation. In my example, there is an inflation rate, which you could have calculated from the toy data I gave. $10 to $100 dollars over 33 years gives a rate of $2.73/year. Get it?

To reiterate, I have provided evidence that since 1970, income inequality has increased, but that it is untrue that 99% of the population has become poorer in real terms. Not only have you failed (miserably) to refute that claim, you have provided zero, nada, zilch, evidence that 99% of the population has become poorer in real terms. Can you provide ANY evidence that that is true?

I've tried to be nice and explain concepts as clearly as I could, but apparently you are more interested in calling me an idiot than seriously engaging in a meaningful discussion. It's very frustrating that someone I probably agree with in a general sense (income inequality in the US is too high) has such a poor grasp of economic concepts. Seriously, enroll in an Econ 101 course at your local university for one or two semesters. It would make a huge difference.

please go easy on the vitriol. If you disagree, disagree, but this is not a forum for sustained insults.

Joseph,

the study I was referring to was measuring gdp/capita.

someone,

you seem to assume two things that are highly questionable: a) that everyone has human welfare (as opposed to, say, personal profit) as his goal; most particularly, there is *nothing* in economic models that has anything at all to do with measures of happiness or welfare; b) that all values are equal and do not require discussion or argument.

As for CEOs pay, we should have all learned by now that they have nothing to do with performance, and that unfortunately it isn't just the stockholders' money to goes down the drain, it's potentially the entire global economy.

Massimo, saying that CEO pay is going to drag the entire global economy down the drain is being melodramatic and alarmist, not to mention absurd. Someone said that they average CEO in the S&P 500 is paid $10 million. That means all of them together are paid $5 billion. The market capitalization of the S&P 500 is about 9 trillion, the market cap of all US stocks is about 12 trillion. So assuming CEO's are paid roughly in proportion to the market cap of their companies, CEO compensation for all publicly traded US companies is 6.7 billion. US GDP is about 14.4 trillion, so compensation for CEO's of publicly traded companies is 0.046% of GDP. That's hardly going to drag the entire economy down the drain.

Also, when you say CEO pay has "nothing to do with performance", I assume you are citing highly publicized cases where CEO's of failed companies, such as banks that wiped out in the subprime, had been paid many millions of dollars. But in most of those cases the CEO had lost his job without good prospects for another one, and when the high compensation was agreed to, he had been doing well. I think CEO pay will usually, when it is agreed to, be quite linked to the CEO's previous track record.

Perhaps you missed it, I'll repeat: since unions have lost a lot of power, wages haven't increased for people in nearly 30 years. There is a pretty good correlation in the United States where/when corporate profits get stuffed, unions are weak. There is a glaring statement to be made here, I don't see how you can say 'we've had it good'.

One thing that has also been to blame for unskilled wages not rising in the last 30 years is that we have been immigrating millions and millions of unskilled immigrants, who swamp the market for unskilled labor, driving prices down. If it weren't for that, unskilled wages would be much higher than they are today.

lalawawa, the unions or the workers are not stealing anything, and characterize it as such seems to me, frankly, an incredible turning of things upside down.

I think I need to explain why I feel that union wages are ill-gotten spoils.

In a non-union free market economy, your wage is determined by several things. The demand for your skills, the scarcity of your skills, the prestige of the job (high prestige jobs are paid LESS).

Artists who are not famous are paid very, very little, because the prestige of the job is very high. Accountants, who have very little prestige, but who have to be quite skilled, are paid a lot. Part time college professors, though they have to be quite skilled, are paid almost nothing, since the job carries so much prestige that many people are willing to do it almost for free.

If a given skill set is in short supply, the wages for that skill set rise, causing more people to get trained in that skill set. If there is an excess of people with a skill set, wages drop, causing people to leave that profession.

Thus, the system keeps things in balance, getting the right number of people developing the right skills. A wage determined through this mechanism is an honest wage.

One of the biggest problems facing the economy is that so many people arrive in the workforce without skills. Even people born with a silver spoon in their mouths, who have their college tuition paid for by their parents, often major in something impractical, economically castrating themselves. It is important that the economy reward those who do get the skills it needs, or people won't get them at all.

Suppose MacDonald's were to surround you with a picket line of angry people who would beat up anyone else who tried to sell you food, preventing you from obtaining food from anyone other than MacDonald's. Eventually you would be so hungry that you would pay them $2,000 for a big mac. Would MacDonald's have "earned" that $2,000? Obviously not. They would have "extorted" the money. That's exactly what unions do. They extort the wages they get. I don't feel unions are "stealing", but I do feel they're "extorting".

I said As for reviving unionism, it depends on the means. One measure that's on the table is to remove the secret ballot vote when unionizing companies. The only reason I can see for a worker to publicly sign the petition to unionize his company and then vote against it by secret ballot is if he was physically intimidated by the union.

Derek W said

I have never met anyone who has been in a union who has said they have been intimidated by their own organization.

Two things: without question, unions try to physically intimidate anyone who would cross their picket lines. Furthermore, if intimidation is not involved, why would anyone publicly sign the petition for a union to be formed then vote against it in the secret ballot?

It shows that inflation-adjusted income has gone *UP* for everybody above the bottom 10%, for whom it has stayed flat. And the bottom 10% are in direct competition with all the illegal immigrants who have arrived.

This is interesting in light of that fact that in 1980 there were a LOT of Americans getting payed much more than they deserved, like nearly everybody in the UAW. This has been largely corrected. Many jobs were lost in Michigan, and much of US auto production has moved to less union-friendly states. Today's American auto workers are paid much less, in inflation-adjusted terms, than they were in 1980, and many of them are not auto workers any more.

So that's someone whose pay has gone down. Yet real pay for all percentiles in the chart has at least stayed flat, and for nearly all has gone up. That means that pay for many people has gone up quite a bit, to compensate for all the union workers who ground due to overdue union busting. As a result, we now have a more just, as well as more prosperous, society.

I obviously can't speak with familiarity with that situation in Australia, but frankly, those aren't arguments against unions - they're complaints about inconveniences.

I think there is some disagreement about the meaning of the word "inconvenience". Yes, having your leg torn off is an "inconvenience", but when the severity gets above a certain level it's time to use another word. Getting dumped in Sydney when your intended destination is Melbourne, 550 miles away, with no functioning air travel in the country, is a bit more than an "inconvenience"!!! Having no mail for a few weeks is more than an "inconvenience".

Furthermore, what I was saying about the street car system was that it was fundamentally unable, in spite of the fact that all the expense of building it was finished, to achieve 2 of its fundamental objectives: A: providing transportation reliable enough that people could live without cars, and B: reducing drunk driving. This is more than an "inconvenience".

What were the unions striking for? Union reps happened to wake up one morning and say, 'hey, let's strike and piss off the city because we can!'. No doubt there are reasons - reasons for those workers.

I told you, one thing they went on strike for was they didn't want to work the late shift. While that was catastrophic in terms of the usefulness of the street car system, their attitude was "Screw everybody else, we have a monopoly and we can demand anything we want and get it.".

There are also debarkation disputes, where a company buys a new piece of machinery and two unions make conflicting claims to jurisdiction over it, and go on strike. In this case the object of the strikes is not the improvement of working conditions or compensation, it is simply a turf war between two union leaders seeking to maximize their personal empires.

Many Americans have been forced to use credit cards in an attempt to match monthly income with monthly expenses. I do not think this is a big secret.

I heard that the average American household is $9,000 in credit-card debt. That doesn't even include auto loans.

I think a few fairly poor people are "forced" into credit card debt, but I think in most cases that debt is not "forced", it's just due to people living beyond their means.

A large share of new car purchases are financed. In my book if you can't afford to pay cash for a car, you certainly can't afford a new car. The last car I bought was a 10 year old Saturn for $2200. It got me around just fine. But many Americans would rather have that new car than have savings. I think that's a stupid choice, but it's theirs to make.

I see a lot of women on match.com who admit they make less than $50K, yet they live in Manhattan. I've still dated them, but I keep in mind their values are very different from mine.

Part of the problem is the financial system has been doing such a great job of extending credit to everybody, that people haven't felt there was a need to save money for a rainy day -- they plan that if they fall on hard times, they'll just go into debt.

Two things: without question, unions try to physically intimidate anyone who would cross their picket lines. Furthermore, if intimidation is not involved, why would anyone publicly sign the petition for a union to be formed then vote against it in the secret ballot?

This is very much in question, actually. Certain studies have shown that this claim is baseless. Unions do not have the power to cut your hours, fire you from your job, cut your pay, change your hours or shift you to a different job. Unions (in principal) are for workers to have a better standard of living. Businesses do not just do this willingly. If you honestly believe the contrary – that businesses will do anything and everything to make sure their workers are doing as well as they can - further discussion may be difficult. (Note: you also have to differentiate organized strikes and picket lines from unorganized, as studies have also shown results worth looking at as well.)

If you actually look into the history of labor in the US (which at this point I am convinced you’ve never done), you will find a much different story than the one you’re trying to perpetuate here. Corporate lawlessness and state force has far out-weighted that of labor unions.

Upon further review, you’ll find that "Data from the United States Department of Commerce and Internal Revenue Service indicate that income inequality has been increasing since the 1970s". Here is the link for further review. Yet here you are saying such things as As a result, we now have a more just, as well as more prosperous, society.

Also, there is literature out there, like State of Working America which shows that (using 2005 dollars, discounted for inflation) a person in 1973 (non-supervisory worker in production) earned $581.67. In 2005, $543.65. The hourly wage during this period only performs slightly better. This means that the average production worker or non-supervisory worker was able to buy fewer of the goods and services which make up a typical annual package of such products compared to the average person 30 years earlier.

Getting dumped in Sydney when your intended destination is Melbourne, 550 miles away, with no functioning air travel in the country, is a bit more than an "inconvenience"!!!

But it’s still not an argument against unions. There have been events like protests which have shut-down parts of a city – both here in the US and abroad… that does not mean that those protests/organizations are bad.

I think I need to explain why I feel that union wages are ill-gotten spoils ...

Its amazing to me that one would equate workers organizing for a better standard of living as 'extortion' while overlooking the causes which would motivate people to organize at all - job insecurity, low/stagnant wages, no/better benefits... As I said earlier, manpower comes at a price. We're talking about human beings with needs - the need to maintain families, eat, pay for education, etc. . who have lives that develop over time with different, sometimes more pressing needs - in which time increases in wages, better benefits, etc is necessary. (this goes without even mentioning some of the outside pressures which can contribute - like higher prices at the gas-pumps.)

Why is it so difficult to convince you that businesses do not go out of their way to provide a better standard of living for the manpower they need? They are not employing robots. If that were the case - unions wouldn't exist and neither would your complaints. Hence - at what point do we begin to ask ourselves if there is a form of 'extortion' that unions are responding to?

Again, unions are not perfect and can certainly be guilty of abusing power, but they didn't come into existence without necessity. Did you enjoy the weekend? As the bumper sticker says - it was brought to you by the labor movement. That and many other things we take for granted today. I would be very much opposed to this non-union, free market-based economy you keep referring to. (In fact that world existed - before the labor movement. Many people didn't like it, apparently.)

As far as skillsets go when coming into the workforce. Its difficult, in my opinion, to measure a person in this way. There are many factors which lead a person into certain directions in life, particularly with their careers which effect the decisions they make as to what skills they think they need/desire.

In retrospect through this discussion of ours - the differences aren't in the details, its in the framework (philosophies) we have. At least that much, anyway, I think is revealing itself.

Darek, you quoted my question "if intimidation is not involved, why would anyone publicly sign the petition for a union to be formed then vote against it in the secret ballot?" without answering it.

You seem to be claiming that unions do not threaten violence against strikebreakers or people who don't want to join the union. I feel you are obviously wrong. I think you may be drawing a distinction between violent acts actually ordered by the union leadership as opposed to "spontaneous" acts by the rank and file after the union leadership has roused them to a frenzy. I draw no such distinction; while the union leadership, for legal reasons, may pursue a policy of "plausible deniability", it is still violence by the union movement.

I do not claim that employers will voluntarily raise workers pay and benefits if they don't have to. If they can, they will pay the workers nothing. They will also, if they can, charge customers huge amounts while providing them with nothing. I remember a friend told me he was shopping for a house, and the real estate agent asked him "How much do you want to pay me for this house?". My friend thought it was a stupid question. He said "I don't want to pay you ANYTHING. I want it for free!". Welcome to capitalism.

But because there is finite labor available and substantial need for it, employers HAVE to pay wages and provide decent conditions, without unions. In my work as a software engineer, I have never engaged in collective bargaining but my pay is adequate as are my benefits. Welcome to capitalism.

The difference in standard of living between now and 1820 was mostly brought about by technological change and increases in productivity, not the labor movement. The labor movement has had a retarding effect on productivity and therefore average standard of living.

I do not deny that income inequality has increased since 1980, but that doesn't bother me, especially since many people in the so-called "middle class" in 1980 were unskilled unionized workers being payed much more than they deserved. Chris Muir's chart shows that for nearly all percentiles in the economy, real wages have gone *UP* since 1980. It seems only fair to me that most of the fruits of increased productivity since 1980 should wind up in the hands of the highly skilled, since it is the highly skilled who are bringing about the increases in productivity.

I haven't seen Moore's movie yet, I'm planning to see it Wednesday with some people. But I've heard the idea about employee-owned businesses before. Yes, there are a few of them, but I don't think it's viable for the whole economy, and I don't think it's a good idea.

First, the question is, do the workers have enough capital? I don't have any numbers, but I doubt they do in any but the least capital-intensive industries. If a middle-to-lower-middle class person has much capital, it's usually tied up in a house.

Secondly, it's a bad idea to invest in the company you work for from a risk diversification point of view. You want your investments spread out, so that you're not going to be wiped out if any one of them goes sour. If everything you own is a share of your company, and your company goes under, you find yourself unemployed and broke at the same time -- not good. I've worked for companies that had "stock purchase plans" where you could buy some of your company's stock at 15% off. I would do so and then immediately sell the stock. My portfolio was over invested in that company just by virtue of my working there.

Massimo said CEO pay... I think the pay scale is immoral, but what dragged the economy down is their greed, not the pay.

Massimo, greed is not a problem, so long as it is pursued honestly and morally.

What broke the economy is that too many people believed that it was a fundamental law of physics that real estate prices would always rise forever. I've been telling people not to buy real estate for the last 20 years, and before a couple of years ago you couldn't reason with them.

I guess it's not totally surprising that Joe Sixpack could be that stupid, but a lot of very smart investors on Wall Street were that stupid too, how is a mystery to me. Wall Street put a lot of deals together that were going to blow up in their faces if real estate prices started to drop, and then drop they did.

Darek, you quoted my question "if intimidation is not involved, why would anyone publicly sign the petition for a union to be formed then vote against it in the secret ballot?" without answering it.

You’re referring to the EFCA and making a specious claim. No one wants to end the secret ballot, by the way – if you refer to the actual legislation, that option is still available. Also, polls show overwhelmingly that most people would want to join a union if given the chance, so I don’t see what you’re going on about with this. Not to mention - I find it interesting that you omit any mention of the possibility of any intimidation coming from the other side – bosses/management. It amazes me how that gets next to no mention in these debates – kudos to right-wing propaganda.

You make unions sound as if they have the resources and power businesses/management do. This is not reality and neither is your talking point.

Studies also show a good percentage of workers are illegally fired every year for trying to organize (when they are protected by the NLRA) – you don’t think any of those who are not fired aren’t ‘intimidated’? What about the industries not protected by the NLRA? Of course, there is always ‘plausible deniability’.

The difference in standard of living between now and 1820 was mostly brought about by technological change and increases in productivity, not the labor movement. The labor movement has had a retarding effect on productivity and therefore average standard of living.

I would like evidence on this, if you have any. I have shown thus far what correlates pretty well – where unions are non-existent or are weak, workers are exploited - dare I say 'extorted'.

Chris Muir's chart shows that for nearly all percentiles in the economy, real wages have gone *UP* since 1980

Figures differ. I can show a table (Table A-2, p. 38) that tells us that among males, the median earnings of those who worked full time and made $41,386 a year in 2005 is below the $41,763 mark earned in 1980. Another chart tells us of the meager increase in hourly earnings. The source of Chris’ chart, if you follow that table, is speaking of household income dispersion. Even if we went with Chris’, according to that info, the difference in increase between 1980 and 2003 of the median percentile is ~$6,000. Over 30 years.

That's not what I've heard. I'm investigating this and plan to get back on it. I agree employers may try to discourage union forming, sometimes illegally, but generally not with physical violence nowadays. It's best to have a secret ballot to get rid of any intimidation from either side.

There is also history to consider, which contradicts your notions of the union bogeymen.

The fact that 100 years ago troops were used to break up strikes contradicts nothing I've said. Unions and strikes have been a violent business since the get-go. These people 100 years ago knew that collective bargaining was immoral, they were trying to prevent it, in a couple of cases they got carried away and responded too harshly. The harsh response does not mean that unions are 100% OK. In Saudi Arabia they deal with thieves too harshly, cutting off their hands. This doesn't mean that being a thief is 100% OK.

I said "The difference in standard of living between now and 1820 was mostly brought about by technological change and increases in productivity, not the labor movement. The labor movement has had a retarding effect on productivity and therefore average standard of living."

Darek said "I would like evidence on this, if you have any." It frakking obvious! What do unions do to increase productivity? At best they redistribute income and improve working conditions. This does NOTHING to increase productivity. Unions usually do everything they can to attack meritocracy. One thing that usually happens with union jobs is that everything goes by seniority, not performance.

"I have shown thus far what correlates pretty well – where unions are non-existent or are weak, workers are exploited - dare I say 'extorted'."

I agree that unions generally benefit the workers, provided they don't kill the host organism (the company) that they infect.

Suppose we lived in a state with no unions and no welfare. I think we both agree that this would result in some people starving, or at least malnourished. Suppose the government then said that, to correct this, anyone with less than $20,000 a year of income was legally entitled to commit muggings. Would this be right? It would prevent starvation, but there would be lot of harm done to society by the muggings. It would be much fairer, more efficient, and less harmful for the government to tax those who have money and give some of it to the poor. Similarly, government redistribution of income would be fairer, more efficient, and less harmful than unions. In this thread, on October 8 at 7:04pm I said the government should tax the rich and give some of it to the poor in terms of a negative income tax. This would take care of the poor without all the harm and violence of unions.

That takes care of the poor. As for the median person, I'm not worried about him. He makes $40K. In most states, that's enough to live reasonably comfortably, especially in a two income household, and it usually means he gets benefits. I see no reason for the state to intervene or to allow him to use collective bargaining so that he can be paid more than his skills warrant. I see no reason why the unskilled should be making an increasing amount of money whether they've been making contributions to society's increases in productivity or not.

It's best to have a secret ballot to get rid of any intimidation from either side.

Intimidation is already happening though. I don’t understand how/why opponents of the EFCA do not understand this. Under the current system, and per NLRB regulations, employees can ask for union representation if they can get 30% of people to sign cards for that request – upon which the NLRB checks out the signatures and then moves for an election. This happens all before the secret ballot. Now, look, it shouldn’t be difficult to even guess where a boss, for example, might be a factor in intimidating employees prior to the secret ballot. Especially since employers have the opportunity to challenge any of the signatures before the election can be called if they find reason to. I’m sure you’ve heard union-workers cry ‘coercion’ and ‘blacklist’ before… well, that’s when it happens. If you knew your boss was opposed to unions, would you sign a form that calls you out as a union supporter? What if you don’t even get to the election?

Never mind the secret ballot as because of this, there is no secret ballot in the sense that its useless when it finally comes into play. Hence the EFCA – even while having the secret ballot remain an option - is a way to streamline the process to get to where you can have the option to hold a secret balloted election more quickly, without any intimidation or interference.

Not sure how you feel about Slate, but Heres a good sum up to further explain what I’m getting at.

Also, you think collective bargaining is immoral? Would you mind expanding on this some more?

Given this attitude which presents unionized workers as either too lazy or unskilled and therefore undeserving of their pay/benefits, that this is not something strictly unique among unionized-workers.

First of all - many unions encourage workers to be productive and be on their toes by giving people access to training and even scholarships/discounted tuitions (as an example) to enter the classroom to upgrade their skillsets where need be and applicable. Employers do this as well, of course, but its not as if unions do not.

Second, this idea that only unionized-workers can somehow only be guilty of being lazy and lacking skills is grossly one-sided. I'm sure everyone has had the experience of working at a company (non-unionized) where they can point to a certain person and accuse them of being either lazy or lacking skills. This isn't a quality solely found within unions or companies/employers, for that matter - this is a quality found within people in general - non-unionized places of work cannot claim to be without this trait among their workers.

One could argue that unions offer more of a security blanket to fall on in these types of cases, making it much more difficult for the employer to rid themselves of someone who isn't 'productive enough'. Surely there have been cases where this is clearly taken advantage of, however, it doesn't bother me that this security blanket exists. I would certainly be in favor of having policies worked out so that this becomes more efficient and accountable - but I wouldn't be in favor of removing tenets of job security.

Darek said "I would like evidence on this, if you have any." It frakking obvious! What do unions do to increase productivity? At best they redistribute income and improve working conditions. This does NOTHING to increase productivity. Unions usually do everything they can to attack meritocracy. One thing that usually happens with union jobs is that everything goes by seniority, not performance.

Do not forget that places like Europe, where the majority of the workforce in some countries have union contracts, are still growing decent GDPs.

Finally, I should mention, in spite of the fact that I’ve taken so much effort to defend unions (and I am in favor of organized labor – in principal that is, I am not in favor of poor union practices and representation or any kind of violence that may go on) I stand by a previous comment I made way back in this discussion where I said “I would actually agree that the current systems today of income distribution could be improved, but the solutions will not come when businesses take measures to give as little as they can to that manpower in order to benefit themselves.” Meaning, as much as I am defending labor and unions, I wouldn’t say that they are the answer, but under the circumstances I’ve been arguing, they certainly provide a answer and more importantly, the best answers we've seen to an exploited workforce.

Most practical people in fact like conservative policy's in economics and governance some (who have their ideological leftist agendas) just want to call it something other than "conservative". And that is flat out dishonest.

And on that note, Michael Moore is dishonest because he wants to to think of his ideas as progressive when scaling back anything (but you can still have the freedom to build a BIG corp if you want to) is conservative not progressive.

Corporations and politicians have precisely all the power that they have because WE collectively (LIBS INCLUDED) have handed it to them. Got that?

Most certainly Moore has never walked into and spent money at a Starbucks, Target , Wal-mart Chevron and supported any of those huge corporations, has he? In my thinking, Moore is just your garden variety hypocrite who tries to stir up economic and then eventually class warfare. One of those people who is great on theories but has no concept of reality!

"So what" over what he writes and rants on about...his concept of economic "polices" just don't work in the real world!

Darek said "Sorry, there may be some cases, sure, but this is not accurate." quoting an economist article.

The economist article described market pressures on union workers that cause them to be productive. But all those market pressures are on non-union workers, and more so, because it is easier for employers to fire non-union workers. I maintain that in general, union workers are less productive per man hour than non-union workers, and far less productive per wage-dollar.

I finally saw the movie Wednesday night. I saw it with a woman who did not normally read the business news, and her reaction was that Moore only showed negative consequences, he did not explain how things happened. I agree that Moore's intention was to incite class hatred, rather than to inform. It was two hours of non-stop vilification.

A few things:

Pilot Pay:

Moore went on and on about how little airline pilots are paid. The fact he quoted was that beginning pilots on American Eagle are paid $20K a year.

Lots of people want to be pilots, the pay if you're flying a large plane is reasonable to good, but you have to log a lot of hours to be qualified to do that. To get those hours, you have to work many years for practically nothing as a flight instructor or flying small planes, basically as an apprenticeship. Eventually an experienced captain of a jumbo jet will make over $200K. Moore doesn't talk about that -- the fact that he raves about the low pay of beginning pilots without mentioning the high pay of experienced pilots is such a grave omission that it's basically a lie, or at least a major distortion. Source on pilot's pay: http://www.fool.com/community/pod/2000/000522.htm

Foreclosures:

He spends 20-30 minutes on this one couple being evicted from a farm in the Midwest they'd lived on for 40 years. A few questions come to mind: if they'd been there for 40 years, why wasn't the farm paid off? Most mortgages are 30 years. If they'd taken out huge equity loans on the farm, then it wasn't their farm any more, was it? Lots of people would like to live on a farm, but they have to live in apartments or trailers to make ends meet. If this couple was finding themselves strapped for cash, they should have sold the farm and moved into cheaper accommodations rather that just sitting there waiting to be foreclosed upon.

The devastation of Michigan:

There was a feeling of deja vu for those of us who had seen "Roger & Me" as he spent a lot of time talking about how the Michigan auto industry was devastated. It never seems to occur to Moore that the reason Michigan's auto industry got so wiped out was that aggressive unions had undermined its global competitiveness.

Priests:

Moore interviews a lot of clergy who tell us how profoundly "evil" capitalism is. Interestingly, he does not interview any Evangelicals, only Catholic priests. The Catholic practice of having people who have taken oaths of poverty lecture the rest of us on economics makes *exactly* as much sense as their practice of having people who have taken vows of celibacy lecture the rest of us on our sex lives.

I do not disagree, however, that Jesus had a negative attitude toward the wealthy. He lived centuries before anyone said anything intelligent about economics. He thought the end of world was going to happen in a very short time, so he was not the least bit concerned about productivity or job creation. Pretty much everything he said about economics was counterproductive. Catholics are more faithful to Jesus's messages about economics than Protestants, there was a re-thinking about the subject in the Protestant Reformation called the "Protestant Work Ethic" that reconsidered these values and resulted in a great increase in productivity in the Protestant countries.

Moore spends a lot of time interviewing some red-headed bearded guy who I didn't recognize and who I don't remember being introduced. He said that Wall street served no productive function, in fact their function was totally destructive. He said Obama's Treasury secretary Timothy Geithner had been a screw up in every job he'd had before nomination, and that Geithner's only qualification was a willingness to tell his bosses what they wanted to hear, however absurd. I was really wondering who this clown was, and what his qualifications were, other than a willingness to tell Moore whatever he wanted to hear, however absurd.

Having followed the business news, it was amazing to hear that Geithner was so unqualified. Wall Street was quite happy with him -- if Obama had picked someone unqualified for such an important position at such a crucial time, there would have been a lot of alarm about it in the marketplace and in the news.

Wall Street's function is not "totally destructive". It is where decisions are made about which companies are going to survive and which are going to fail.

Derivatives:

Moore asserts that derivatives are "deliberately difficult to understand to avoid regulation" and interviews some boob who can't coherently explain what an option is. I can assure you, the people who trade in derivatives generally understand them, it's very unwise to trade in derivatives you don't understand. I've been paid in options, it's a good way to provide incentives to workers in a start-up.

The Advisors:

Moore makes a big deal talking about how much money many of the economic advisors had been paid prior to being appointed, as though that were a disqualification for office. I want the best financial minds in the world in those jobs, and one sign of being one of the best financial minds in the world is having made millions of dollars. I sure don't want some priest who's taken an oath of poverty.

Moore extensively vilifies Goldman-Sachs, and makes a big deal of the fact that Henry Paulson, Bush's Treasury Secretary, and many of his advisors, worked there. For one thing, Goldman-Sachs came through the housing bubble better than any of the other big banks and was the least in need of being bailed out. For another, there's nothing wrong with people who've worked in the private sector taking jobs in government.

The Bailout:

Moore really goes out on a limb, saying there really was no financial emergency, there was no risk of the economy sliding into a depression, it was all a hoax concocted by Bush to justify the bailout and thereby steal taxpayer's dollars. This is totally disconnected from reality.

For one thing, much of the bailout money has been returned to the government at this point, so if it was theft, it wasn't a very effective way to steal. For another, the bailout was terrible news for the Republicans -- it all but guaranteed a victory for the Democrats in the election, where before it, McCain had a fighting chance. Most of the resistance to the bailout in congress came from Republicans. Moore interviews some female congresswoman, a blithering idiot, who said it was very "suspicious" that the whole thing happened so shortly before an election. I don't see how being before an election HELPED pass the bailout, when 90% of the phone calls congress was receiving about the measure were against it. The congressmen voted AGAINST what their constituents were overwhelmingly telling them to do. They did it because the alternative was to be eventually held responsible for disaster. When Fed chairman Ben Bernanke announced the need for the bailout to a bunch of congressman, one of the first questions they asked was "Can't this wait until after the election?".

Another thing: Vikram Pandit, the CEO of Citigroup, is one of the Wall Street bankers vilified by the movie. Vikram Pandit did not take over Citigroup until *after* his predecessors had made a mess of it, and he is currently being paid $1 a year in compensation.

Hm... I have tried to read, or at least skim over, all of the posts, but haven't seen this:

As far as I understand (might be wrong), worker unions are much stronger in Europe than in the USA. (I don't know how the situation is in Japan, would have to ask my cousins living there)

If that IS the case, then how come the auto industries in Europe are fine, while the American ones got "destroyed by the unions"? Hell, even GM's divisions in Europe seem to be fine compared to the American part, even with all the "socialist" things they have to put up with by law. So, what gives? We have strong (and usually corrupt) unions in Brazil too. Auto industry there grew during the last year of crisis. The auto dealership my father manages, and it wasn't an isolated example, was selling very well.

The point being: keep simply saying that unions ruin the American industries might not fit the international experience.

That would make all the "unions destroy the auto industry" more propaganda than anything. Or, at the least, show that Americans don't have competence to run/regulate/whatever unions. Just because one country cannot do something it does not mean this something is impossible. It might be inadequate to some society for different reasons. But I don't think Western Europe and the USA are that different...

Then again, I could have oversimplified and/or misunderstood something.

I think the situation with the UAW was different from the European auto unions.

For many years, for example during Moore's childhood, Americans did not like the type of cars foreign countries made, and the UAW had a monopoly on American auto labor. In this context, compensation for American auto workers grew way, way above the market value of their skills. The unions developed an adversarial relationship between labor and management, and undermined the work ethic. There were a lot of stories coming out of Detroit about what a bad attitude the workers there had about their jobs.

At the same time, the European car companies were all in competition, and I don't think a single union controlled all European auto labor. So the compensation couldn't grow that unreasonable.

My father worked for GM's German car company, Opel, and one thing he remarked about was the labor force remembered the German hyperinflation under the Weimar Republic, and were generally reasonable in their demands.

Once Americans started to like foreign cars, it was too hard to correct the problems with the work ethic and to get the union pay down to something reasonable. Japanese companies started opening car plants in the US, but never, or almost never, in Michigan. They would go to other states that had less union-friendly laws. No one wanted to open manufacturing plants of any kind in Michigan and deal with the culture of that work force, though everyone knew Michigan had plenty of unemployed workers wanting jobs. Detroit now has half as many people in it as it did in 1980.

Japan is a whole different situation, they have a completely different cultural relationship between the workers and management.